Case Studies

In every significant commercial real estate transaction, there are significant challenges and hurdles. A company “going it alone” on a real estate procurement or renewal project can become overwhelmed by these obstacles, and can end up hurting themselves by leaving significant advantage in the landlord’s court.

In the case studies to follow, we will demonstrate how we have helped in specific ways to overcome these obstacles and turn sometimes daunting challenges into strategic wins.

Fox Rothschild, LLP
100 Park Avenue – entire 15th floor

Philadelphia based law firm wanted to open a New York City office. They bought a small NYC firm, thereby acquiring space in a class-C building as part of the deal. Our role focused on initially leasing a 10,000 rsf space in a class-A building (100 Park Avenue) while subletting the class C space. As the tenant’s growth moved at a faster pace than anticipated, we subsequently approached the landlord to take the balance of the space on the floor at 100 Park Avenue (20,000 rsf). In order to do so, the landlord needed to move the existing tenant. In addition to our tenant moving into their new combined 30,000 rsf space, the law firm acquired another firm coincidentally also at 100 Park Avenue but did not want to keep the additional 10,000 rsf space that came with the purchase. We then negotiated with the landlord to take back the floor acquired in the second purchase. The landlord did not initially want to take back the floor as he was renovating the building, but we held out for the right deal and eventually got the tenant the best deal possible.

Joho Capital, LLC
55 E. 59th Street, 15th floor
New York, N.Y. 10022

Joho Capital is one of the largest hedge funds dealing in Asian securities.

We negotiated Joho’s first Lease in 1996 and 2 additional ones in subsequent years. Over that time, they were growing and their space was starting to get tired. When we learned that the rest of their floor was to become vacant, we approached them to consider this option. We brought in 2 architects to determine suitability and though the new space was more than double their current office, it was still too small. However, keeping both would be more than they needed and too expensive. We came up with the solution to build out the new space and capture some of their original space within the deal, thus allowing them to find the most suitable result. Though the size and annual rents were eventually acceptable, this still left us with a problem since the landlord was not offering the tenant enough power to run his trading desk. We kept pushing the engineers to calculate the tenant’s power needs and once determined, convinced the landlord to finally give us the power that we needed.

T3 Capital LLC
One State Street Plaza – entire 10th floor
New York, NY

T3 Capital, a 25,000-square-foot trading operation formerly at 100 William Street, had been trying to negotiate a renewal with the ownership’s agents CBRE. When we had met with them, their last proposal from the owner was a seven year term averaging $49.00 per square foot. Since T3 Capital and the landlord were at a stalemate, we were hired as their exclusive broker to negotiate on their behalf.

We immediately showed them other prospective properties priced 20% less than 100 William Street, while simultaneously submitting low-ball (but appropriate) offers for the space at their current building. After touring approximately 20 different properties, we narrowed our choices to three buildings: 100 Church, 1 State Street Plaza and 100 William Street, all of which were represented by CBRE as the landlord’s agent.

T3 Capital loved 1 State Street Plaza, however, the asking price was $46.00 per square foot which was significantly higher than their budget while 100 Church was $36.00 per square foot. We essentially used 100 Church and 100 William Street as bait to drive the price down at 1 State Street Plaza even though CBRE had represented all three properties.

Had T3 Capital hired CBRE as its tenant representative it would not have been able to achieve the incredible numbers shown below. At the time of these negotiations 100 Church Street had a large block of space available so the owner was eager to make a deal, however, T3 Capital preferred 1 State Street Plaza. The tenant visited 1 State Street Plaza 15-20 times (versus just 2-3 visits to 100 Church Street) and had CBRE represented T3 Capital it would have been obvious which way the tenant was leaning. T3 Capital would have lost its leverage in negotiations. Since T3 Capital hired Norman Bobrow & Co., Inc. (A tenant-rep only firm) it was able to fully control the flow of information about its final plans and leverage each building against each other for the best possible numbers.

With aggressive negotiations with 1 State Street Plaza, we eventually negotiated a rent of $30.00 for 5-years, $32.00 for 5-years and $34.00 for the remaining three and a half years, a total of $5,203,275 off the initial asking price. Combined with a $1,081,200 workletter and 8 months of free rent valued at $576,670, T3 Capital had a total savings of $6,861,145 over the course of their lease.

Carnegie Hill Endo, LLC
1510 Lexington Ave
New York, NY 10029-7149

Carnegie Hill Endo, LLC (CHE), a group of 15 gastroenterologists, needed to find a 12,000-15,000 rsf space on the Upper East Side for an ambulatory surgical center (ASC). They had been working exclusively with another firm for 8 months but were unable to locate a satisfactory space which met all of their criteria. They were going to settle for an overpriced basement space that presented numerous complications as well as a rigid owner. The difficulty was compounded because of their particularly unique demands: they needed at least 9,000 rsf to be on one floor, with a minimum 10 foot ceiling, 20 foot on center column spacing as well as roof/terrace access for generators and other equipment.

In 2011, we were hired exclusively to try to solve this problem while meeting all of their requirements. As the UES does not have a large portfolio of available space and an ASC is not a conventional use of space which most landlords find acceptable, it was necessary to walk every street in the desired locations as well as contact every owner who had a floor plate large enough to accommodate this requirement, but in a budget range that did not reflect retail prices.

We were able to locate a recently-built property that not only offered new construction and mechanical systems, but by going one block north of 96th Street, allowed CHE to get a ground floor location with excellent visibility and street access at office rents. CHE was also able to achieve growth potential, an excellent concession package as well as future options at fixed numbers with an owner who was working hand in hand with them to make their construction process as smooth and simple as possible. The location is 2 blocks from Mount Sinai Hospital, one block from a subway, and on a street that allows easy access to the FDR Drive next to a Central Park crossing, CHE is able to service all their patients as well as the doctors who are affiliated with different hospitals.

Franklin Weinrib, Rudell & Vassallo, PC
488 Madison Avenue -18th floor
New York, NY 10022

Franklin, Weinrib, Rudell & Vassallo, PC (known as FWRV), a law firm that specializes in the entertainment industry, has been located at 488 Madison Avenue since 1992. In 1996 Norman Bobrow & Co. was hired as their exclusive broker to help them find larger office space, since their current location had become inadequate due to a 30% increase in staff.

After extensive research and comparisons, we determined that the most economically feasible space was located in their current building on the 18th floor, which is a base floor in the building. As the building had not been re-measured, FWRV signed a new lease with a generous below-market loss factor which resulted in savings of over 20% when compared to comparable space in the vicinity.

In June 2011, FWRV was faced with steadily rising rental rates that had already increased $10.00 per square foot over the previous year. The firm hired us 17 months before their lease expiration to find new space and/or simultaneously negotiate their renewal. We showed the firm’s partners numerous other locations, but only the space at 3 East 54th Street was found to be comparable to their existing location.

We held extensive negotiations and reviewed several series of offers from the landlord of 3 East 54th, who proposed greatly reduced rental rates, full building installation, and free rent to entice the firm. In turn, we showed the offer to the owner of 488 Madison Avenue to demonstrate that FWRV would be ready to move to the other location if they did not receive a favorable offer. The landlord knew that if the firm left the building they would have had to demolish the space and offer a full building installation plus free rent to a new tenant, at a cost in excess of $1 million.

In the end, the landlord agreed to renew the lease $15.00 below the market value, one year before the lease expired. They also provided $165,000 in cash to improve the space (which was already in good condition).

International Labour Organization to the United Nations (ILO)
1 Dag Hammarskjold Plaza
30th Floor
New York, NY

The ILO was a tenant we worked with for over 30 years including their relocations and renewals. In 2010, the ILO called our firm to negotiate their renewal at 220 East 42nd Street (The Daily News Building), a building they had occupied for close to 20 years. Although they were happy with the building, their space was severely outdated and needed to be renovated. Additionally, the space did not have a sprinkler system and due to a law that would be taking effect in 2019, the space was required to have sprinklers installed.

We approached the landlord, SL Green, with a reasonable offer which included a work allowance, free rent, and some base building work (standard for any new tenant). SL Green arrogantly raised their square footage by 30%, offered a $10.00 a foot work letter and no free rent. Additionally, they asked for rent $12.00 above the market rate.

Angry at their response, the ILO had us search for new space outside of the building even though it was over a year before their lease expiration. After an extensive search, we focused our negotiations on 1 Dag Hammarskjold Plaza, a building known for its unobstructed river views and prestigious tenant roster of United Nation missions.

Since the ILO was founded over 100 years ago and had an annual budget of close to one billion dollars, we were able to secure a rental at a substantially lower rate than their space at 220 East 42nd Street. In addition, the landlord installed a new sprinkler system. Finally, since the ILO still had 12 months of rent remaining at 220 East 42nd Street, the landlord provided free rent through the end of that existing lease with no additional expenses during that term.

All of this was achieved without the ILO having to put up a security deposit.

Mitsubishi Power Systems Americas, Inc.
100 Bayview Circle – entire 6th, partial 4th/3rd floor

Mitsubishi needed additional growth space but the landlord would not accommodate them. We found and negotiated an 18,000 rsf sublet for them within their building. Once we had secured the space, we again approached the landlord to streamline and accommodate the tenant’s space needs. We then structured a deal that extended the lease on their 40,000 rsf of space in addition to making all their leases co-terminus. We were able to convince the Landlord to include a large monetary contribution 2 years in advance of the landlord’s extension as well as obtained prominent building top signage for the tenant. Furthermore, we handled subletting a 6,000 rsf portion for a short period of time reducing the tenant’s rent obligation while giving the tenant room for growth.

Elie Tahari
11 West 42nd Street – entire 14th floor
One Bryant Park – entire 50th floor
510 Fifth Avenue – purchase of entire building
417 West Broadway – retail New York, NY

Elie Tahari’s lease was expiring on Seventh Avenue and 36th Street. His space was depressing, dark, and obsolete. He needed a unique space that would attract new customers, as well as inspire him to create new products. We secured for him a seven and a half year sublease on the Entire 48th floor of 1114 Avenue of the Americas which was formerly the executive offices of Peter Grace. The rent was $22.00 for half the term and $24.00 for the second half, where the subleaser was asking $35.00.

Elie Tahari’s sales went up 300% and secured him as one of the top designers in the world.

We later rented him eleven additional spaces totaling approximately 300,000 square feet, including the entire 8th floor of 1114 Ave of the Americas, entire 50th floor of One Bryant Park, entire 4th & 5th floors at 510 Fifth Avenue, entire 2nd & 3rd floors of 520 Fifth Avenue, entire 2nd floor at 501 Fifth Avenue, entire 14th, 31st & 32nd floor of 11 West 42nd Street and a 190,000 square foot warehouse in New Jersey which was later purchased by Elie Tahari.

Elie Tahari will tell you that a major portion of the success of his business came from the deals which were negotiated by Norman Bobrow & Co., Inc.

In 2007 Elie Tahari rented the Entire 50th Floor of the soon-to-be-completed One Bryant Park for a total of 30,000 square feet. While the economy was thriving in 2008, Elie Tahari felt that the property would be too risky to carry despite paying $75.00 below market rental. Due to Bank of America’s rapid growth in the building and the increasing market, we were able to negotiate a cancelation of this obligation for a penalty of only one month of rent. All this occurred six months before the market collapse in September of 2008.

In 2010, we negotiated the sale of Elie Tahari’s property 510 5th Avenue, for one of the highest prices paid per foot of any office building and four times the amount he paid for the property in 2001. Simultaneously, we leased back three floors for his continuous use for 15 years at $10.00 per square foot below market.

In 2004, Giorgio Armani who occupied the entire 14th floor at 11 West 42nd Street was paying $56.00 per square foot which was increasing to $62.00 per square foot. Armani sublet their space to Elie Tahari for seven years at an incredibly low $29.00 per square foot with no increases. The space was truly a diamond in the rough as it had high-end features such as custom marble, glass and sheetrock throughout the space which was valued at $6,000,000. In January 2011, one year before lease expiration, we renegotiated his 38,000 square foot lease for a new fifteen year term at $20.00 below market. This included a $3,000,000 concession package (which could all be converted to free rent) even though the space was in mint condition.